Competition for rental properties in Sydney remains fierce as figures show vacancy rates remain tight across the city.

According to the Real Estate Institute of New South Wales’ (REINSW) latest figures, Sydney’s overall vacancy rate was recorded at 1.7% during May, marking four straight months of no change in the city wide rate.

While the city wide mark remained steady conditions varied throughout the city’s regions, however REINSW president John Cunningham said the overall tightness of the market is predicted to remain.

“Residential vacancy rates have continued the trend of the last four months and we expect this rate of supply to continue,” he said.

Outside of Sydney, the Illawarra’s reantla market also continued its tight run, with its overall vacancy rate falling 0.3% to 1.4%, led by Wollongong which was down 0.5% to 1.2%.

The Hunter also saw an improvement in its rental market, with its vacancy rate down 0.1% to 2.4% during May despite a 0.3% increase to 2.1% in Newcastle.

In the regional rental markets, New England’s vacancy rate rose 0.4% to 4.0%, while Orana’s rose 0.2% to 3.7% and Coffs Harbour was up 0.7% to 2.3%.

Albury saw a fall of 0.1% to 2.8%, while one the Central Coast the vacancy rate dropped 0.7% to 2.3% and the South Coast was home to a 0.7% to 1.8%.

While vacancy rates remain tight across much of the state, Cunningham said potential changes to negative gearing could force them even lower, which would be bad news for tenants.

“We have heard much debate over the possible abolition of negative gearing in recent times, something that we do not support. If this was to occur we would expect to see a decline in construction and a fall in vacancy rates,” he said.

“This in turn would result in landlords trying to increase rents and a fall in prices for new-builds coming into the market as investors are not happy to make a loss on their investments. We believe that existing owners won’t dump their investments but will make sacrifices elsewhere in their household budgets.”

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